We are supposed to cheer the generosity and common sense of Eric Daniels at Lloyds Banking Group in waiving his bonus this year. Forget it. The appropriate response is astonishment that the bank's remuneration committee could decide that Daniels deserved a "full pay-out" of £2.3m in the first place. What does the chief executive of Lloyds have to do not to earn top marks?

Remember how Lloyds got into its current difficulties. Under Daniels' leadership, it bought HBOS at the end of 2008, killed its own dividend and inherited a corporate loan book that even now may have more horrors to reveal.

Daniels' view is that the deal will come good in the end. "The HBOS acquisition by Lloyds will prove to be very good value for all our stakeholders over the medium-term," he said last month. His is a minority view but, if Daniels wants to be judged "over the medium-term", surely he should also have to wait until then to be considered for a bonus. After all, the HBOS deal will always dominate any assessment of Daniels' reign.

The counter-argument is that annual bonuses are meant to acknowledge performance during the year in question and that Lloyds had a reason to celebrate during 2009 – it avoided the government's asset protection scheme by raising an impressive amount of capital.

Fine, but to award a bonus to Daniels in these circumstances is to applaud one step forwards while ignoring the big leap backwards. Come on, Lloyds is expected on Friday to report a loss for 2009 of £4bn-plus. Praising the "group's overall performance in 2009", as chairman Sir Win Bischoff did yesterday, is plain bizarre.

Indeed, Bischoff entirely ignored the small matter of Lloyds' second year of multibillion-pound losses. "Under the strong and focused leadership of our chief executive Eric Daniels, we shaped the business for future growth," wrote Bischoff. "We built firm foundations through capital raisings, rightsizing our balance sheet and delivering our integration programme."

Such sentiments would be easier to swallow if Daniels was a Mr Fix-It appointed to clear up somebody else's mess. But he's not.

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